WHERE To Print Magazine

AS RECESSION BITES: TOP, VALUE-DRIVEN AND REPUTABLE PRINT & ALLIED MANUFACTURERS PROFFER SOLUTIONS

With the current lull in the Nigerian economy, it is obvious that recession is biting harder than envisaged on the generality of populace while businesses are moving at an irregularly slow pace with uncertainty.  According to the National Bureau of Economic Research (NBER), recession is ‘a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales’

Observers believe that with the rate at which business activities decline, it will take concerted efforts especially from the Federal Government to pull Nigeria out of the woods. In the same vein, WHERE To Print Intelligence Unit sought opinion from top, value-driven and reputable print & allied manufacturers and their representatives on the possible and practical solutions that stakeholders in the printing and allied industry could adopt to ensure the impact of recession is reduced if not totally eliminated on their print businesses. Read on:


‘LOOK AT THE SAVINGS WHICH CAN BE MADE BY SWITCHING TO UV-CTP (CTCP)’

- David Thomas, Sales Director, Hunter Penrose Supplies LTD - World-wide Supplier to the Printing Industries & Authorised Dealer of CRON EUROPE GmbH


What printers should do: Putting all but the most essential capital expenditure projects on hold makes sense, so long as the recession is relatively short. Any large user of offset plates should however look at the savings which can be made by switching to UV-CTP (CTCP), even in today’s harsh business environment. The largest newspapers for example can save up to 50% on plate costs while the investment in UV-CTP (CTCP) is recouped within 2 years or less. This trend has caught on in the UK, where CRON has installed 12 UV-CTP systems replacing traditional thermal and violet technology

‘EVERYBODY SHOULD DO THE RIGHT THING’

On the economy: When I hear people whine on the state of the Nigerian economy, I marvel because they fail to understand that this present administration inherited an almost collapsed economy. The fall in oil prices at the international market affected our economy as the oil revenue was our major source of income as a nation. With this in mind, President Muhammad Buhari Administration has embarked on a number of initiatives that the nation can focus on - for revenue other than oil. With the current analysis, it is good news to see the Foreign Reserve growing, due to stability in the oil price and more barrels been produced by managing the Niger Delta region. If we can continue and maintain this stability till the end of the year, we can equal a total of $40 billion in Foreign Reserve and foreign creditors can lend us money because they know we have the money to pay back and this can be used to defend the Nigerian Naira against foreign currencies.

My only problem with the present administration is that they have failed to come out straight to Nigerians. They should explain their plans for the nation and that - it is not feasible to have result in the short run. Rome was not built in a day. Most of the world’s greatest inventions saw people die trying to perfect it. Hence, we all have to be patient and try as much as possible to see sense in Governmental plans.

On the industry: Our industry can’t purchase print machines now because of the high exchange rate and the fact that almost all the inputs in print production is imported is very challenging. Imagine the price of consumables now; Print Shop Owners are going out of business as some even owe their staffs more than two months salary but we just have to work together and be positive.

We have to be steadfast and be patient. We shouldn’t just expect something that has spoilt or collapsed to be built back within a twinkle of eye; even the 4-Year Term a political regime will use in power cannot be sufficient to rebuild what has been destroyed over the years. Honestly, we will all suffer for things to be better; nothing good comes easy; success comes at a cost and that is what we are currently paying for but Nigerians don’t want to be patient. We are more concerned about the present and if we keep having that type of mentality we can’t move ahead.

- Godwin Ogwilo, Financial Controller, Heidelberg Nigeria LTD

What we should do: That’s the concept we have here in Heidelberg we don’t look at the short term we are after the long term goal. Heidelberg was set up in 1850 and of course you can imagine the founding fathers will be dead already but the company is still in existence. We have employees and we are all enjoying from it. I’m actually preaching these not because I am an APC member or a politician rather I’m only trying to look at it from the past; as an Accountant, I follow the numbers and indices and that’s why I get angry anytime my brothers in the Niger Delta are fighting because at the end we are the one suffering the pollution. Our food and water will be polluted. Even with the 13% Oil Revenue Allocation, I think that is enough because we are all together as a Federation. When I saw Katsina State budget of N44billion, Lagos N400Billion and some other States - which are not equal as well and some particular set of people want to collect 50%; will others starve? So I want to say lastly that everybody should do the right thing, pay taxes and dues and be patient while we believe that Nigeria’s economic prosperity is on its way.

‘BUSINESS OWNER MUST ADEQUATELY LOOK AFTER THEIR EXISTING MACHINES AND INVESTMENTS’

On the industry: Most Printers complain that the end-users of their products are not willing to pay more despite the hike in prices of raw materials. This is the time to draw the synergy between the suppliers and their customers. You need to educate your customers on what you are doing, so they can appreciate what you are going through as a supplier. For example; let’s assume you are a packaging producer and you supply finished packaging product to the manufacturer of the product; in that chain - everybody must continuously remain in business otherwise if the Printer is not able to supply, then the customer will also not get the packaging for his product, and the end-users are affected. You need to properly educate your customers so both parties will understand the situation perfectly.

What we should do: This period of economic certainty is a time for sober reflection where every business owner must adequately look after their existing machines and investments. Spend more on buying printing machine spare parts, maintenance, servicing. If they cannot invest in buying new machines, then they must make the existing ones work perfectly. Heidelberg right now has a lot of service jobs we are doing. It’s quite strange but our engineers are very busy and our spare part business is also quite busy and we have no intention to stop maintaining the machines in the market.

- John Onuegbulem, Print and Finishing Units Head, Heidelberg Nigeria LTD


 ‘PROVIDE UNINTERRUPTED ELECTRICITY SUPPLY’

- Anil Rai, regional Manager, Mercongraphic Nigeria LTD


What we should do: To save printing industry businesses in Nigeria, the first step is to provide uninterrupted electricity supply. The cost of fuel and generators maintenance is very high. The Federal and State Governments must take action on it. Two, because there is no Paper Mills in Nigeria that is functioning, there is rising cost of printing materials due to import duties and high currency exchange rate. These have affected the prices of other printing consumables like inks too. Government must deal with the infrastructure challenges, build and maintain good roads and other unwanted issues affecting print business. Finally, Government should stop outsourcing finish printed materials from other countries to save local printing presses so that the industry can generate more jobs.

 ‘PRINT EQUIPMENT MANUFACTURERS AND DISTRIBUTORS SHOULD GIVE ENOUGH TRAINING TO BUSINESS OWNERS’

- Talal Akar, Business Controller, Tenaui Africa LTD

On FX: Foreign Exchange (FX or Forex) should not be an issue because as the Forex rate is increasing, cost of living is also on the increase as well - and that doesn’t mean business should stop or be barred from growing. We at Tenaui believe that if we train a businessman on how to use his machine effectively and efficiently to be able to generate enough profit and still provide quality; then that is not only helping him grow but also growing our business as well. That is why we don’t joke with After-Sales Services.

  What we should do: Firstly, in the process of purchasing a machine; print practitioners must make sure that the equipment they are about to buy has a good After-Sale Service Support because that goes a long way in determining the survival of your machine in particular and your business in general. Secondly, it is very important for print equipment manufacturers and distributors to give enough training to Business Owners and Machine Operators on the technical aspect of how to run and print on the machine; the types of application you can print on the machine; colour management - which is very important; calibration of the machine in getting the right colours; and how to manage output and waste. On the part of the Business Owner or the entrepreneur, you should know how to print to manage cost. How much is cost per copy? And definitely, with the assistance from the Machine Operator, how to manage quality control base on the type of job you get - which is all part of the education we give our customers rather than just selling the machine. Selling a machine to a customer is basically educating the customer on how to use the machine to produce what he wants, and how to make profit from what he is producing.

For your information, we at Tenaui Africa did a research last month and we realised that 60% of Nigerian end-users that print still prefers to print abroad to local. Why? Because the quality is not there. That is what we - that are the Service Providers - have to change. We have to properly guide our customers on how to use our machines and get the best from them. If we don’t do this, then definitely the industry is going to suffer and instead of you generating the revenue for the country; end-users will still go outside the country to print even with the same machines that we have here. So, we have to educate ourselves on how to effectively and efficiently use what we have rather than outsourcing.


‘PRINTERS NEED TO TURN DOWN THE GAS A BIT’

On the economy: Corruption is the singular cause of the present state of the Nigerian economy. There have been years and years of looting of the national treasury and mismanagement and I can say the present administration inherited an incredibly messy economy and it’s not just the monetary aspect but the institutional part.

Our constitution is not been followed and the same thing goes with corruption. We talk about new measures for corruption and all that (but) we don’t need new measures. People should be convicted for their crimes. The other day, in the PUNCH newspaper a man was sentenced to 8 years in prison for stealing a cable. Just imagine a cable thief and politicians and civil servants continually loot billions of dollars from the national treasury without proper conviction for their crimes. What is the difference? And this is something I so much object. We are in a developing country; what is the difference between corruption and murder? To me, there is hardly any difference. A corrupt person is a serial killer; in my opinion he is somebody who has killed uncountable number of people because he has successfully denied millions or thousands of people good health care system, education, good roads etc. Corruption in effect is serial killing; I don’t see why corruption charges should be less than murders. Nigeria today has one of the highest child mortality rates in the world and not only that women are dying during child-birth because they are unable to access good medical system.

This country’s number one problem is corruption and the current administration is doing somewhat okay job; not what we expect but if we were a bit thorough we will see that we should have expected this because with a judicial system that is completely rotten and corrupt. If we have remembered that before we assigned President Buhari to clean up we would have expected it to take a lot more years. I have been in Nigeria for 16 years and I have never seen one single proper conviction for corruption. We have a society that is so rotten of corruption because the looters have been allowed to walk free; our teachers and police are poorly paid. When I was a military officer in Denmark, I wore my uniform with utmost pride and I was a respected person in my society, some will even tell me in my language ‘Officer well-done’ but reverse is the case here. Our Police Force are ridiculed and are seen as ‘Area-boys’ or even lesser.

On the industry: Any manufacturer in the industry in Nigeria is in big trouble now because there is no money to purchase goods. Any raw material is important and that’s what the government thinks we should manufacture ourselves. Yes, it’s a noble dream but we know it’s not realistic. We could maybe like in the past manufacture paper, maybe in the long run ink but even if we manufacture ink - we still need to import its raw materials. I’m a very big supporter of international trade. I think we need to participate in the trading world. We have certain things we can be good at in Nigeria; we should be good at that and then the rest we should buy from outside. We shouldn’t just attempt to make things by ourselves just for the sake of it. I’m not saying that as a trader but as an honest Nigerian. I think we are wasting a lot of our time if we think we can manufacture everything because it’s not going to happen and in particular it’s not going to happen if we don’t have Power (electricity). Power is the reason why we don’t have a lot of things in Nigeria and why is it we don’t have Power? Corruption; once the government addresses corruption, and then we can address Power, and once we have Power, we can start to look at what products we can manufacture locally but it has to be one thing after the other. Without Power, factories cannot work. It’s completely upside down to think of what we can manufacture locally when we don’t have Power and corruption has not gone away to an extent. We need to address the right things first.

What we should do: I think before we start looking at developing anything, we have to look at the root causes of why things are happening the way they are, industries in general rely on importing raw materials it doesn’t matter what industries you look at, there are barely no industry that rely on locally made raw materials. President Buhari is right trying to identify which industry we can start to nurse and nurture to the extent where we can start to manufacture some local raw materials. In the Printing Industry, it will be natural to look at the paper production, of course I will love to see the revival of the paper mills in Nigeria; it will definitely reduce cost for the average printer if we have locally manufactured paper. It will also help the whole supply chain; it will also stop the dollar outflow which today is happening because of paper. Even if we cannot manufacture the top range of papers which are used for commercial printing, but could we at least produce newsprint and craft papers.

Today corrugated boxes form a deep part of the supply chain in the consumer industry. We can manufacture the craft paper which is one of the crude and raw types of paper we have. At least we can manufacture that in Nigeria. If the next level could be newsprint which is also a fairly crude type of paper that does not require much processing over the next 5 or 10 years, then we have gone very far. If we then eventually grow like Indonesia, China or India, we can the manufacture proper coated, hard paper of course I will be very happy but in Nigeria, we have this tendency to say we have to do everything. It has to be everything and we are not even realistic and we don’t even have Power. Do you know how much Power is consumed in the Paper Mills? We cannot have Paper Mills until we have Power. Even when we have Paper Mills, let’s not look at the whole line up of products; let’s look at craft paper and newsprint papers; if we start with what is realistic for us first, I can see Nigeria in the next 5, 10, 20 Years manufacturing both paper and ink.

Another practical solution that will aid the survival of the Nigeria printing industry especially in times of economic uncertainty like this is for Print Stakeholders to wise up.  Printers are struggling even to keep their basic things together. Of course, there are some exceptional Printers who are doing well even in this period of economic lull and they are mostly Heidelberg machine users who have been around for years, managed their machines wisely and have done the right things at the right sequence. They have enough liquidity to buy paper, ink, and pay salaries on time. So, if you’re limping to the extent that you cannot pay salaries, buy paper or ink then of course you have a hard time surviving in this environment and a lot of Printers today are in that situation. It is not because such Printers lack knowledge or because they are not wise but because they were caught on the wrong leg somehow when the recession set in. Some were having financial obligations they couldn’t handle; some invested very unwisely in foreign currency loans, of course when a crisis hit you; that’s the first people that will feel the adverse effect of the recession.

I have been preaching this since I came into Nigeria 16 years ago; never borrow in foreign currency if your income is in Naira. Even the couple of people who have gone bankrupt now, I had serious talks with them and tried to convince them but some manufacturers came and saw some gains in advising them differently, unfortunately some of them bent to the pressure and did what they shouldn’t have done despite my advice and look at them today. There are some successful printers but even those ones still feel the heat of the crisis.

Generally speaking, during a period like this Printers need to turn down the gas a bit. Yes, some of them will have to lay off some staff and get more efficient and in the process you realize it’s a time for you to cut down your fats; it’s an opportunity for them to cut-cost. It’s a period for evaluation; they should ask themselves: ‘have I been working well enough?’ And adjust in those areas in which they are lacking. So that when the crisis is over, business will be at a more efficient level. They should use this period to sanitize their business, we all know which customers make money for them and these are the type of customers you stay close with, in this period of recession. Everyone should see this period as a perfect time to shed some fat both within and outside the organization.

At the same time, if a Printer thinks he is reasonably sure of the future, now is also a good time to invest and our banks are ready to go with you if your business plan is good enough. Local banks are ready to give loans because they also know the future lies with relatively healthy companies today who will also be the healthy ones in the future but the companies that are limping now are at the risk of survival. What is going to happen in the industry now is that, the weakest ones are already closing their doors on the business and waiting for when things return to normal for them to come back. This is not only peculiar to the printing industry; go over to Ikeja, Matori you will see a lot of companies been closed both local and foreign owned companies. So, I think the printing industry is not hit less than other industries in the country.

- Jakob Bejer, MD/ CEO - Heidelberg Nigeria LTD

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